Investments

6 Months Ended

Jun. 30, 2012

Investments.

Investments

4.  Investments

The following is a summary of Ameriprise Financial investments:

	June 30, 2012		December 31, 2011
	(in millions)
Available-for-Sale securities, at fair value	$	34,590	$	34,505
Commercial mortgage loans, net	2,551		2,589
Policy loans	750		742
Other investments	983		939
Total	$	38,874	$	38,775

The following is a summary of net investment income:

	Three Months Ended June 30,						Six Months Ended June 30,
	2012			2011			2012			2011
	(in millions)
Investment income on fixed maturities	$	444		$	457		$	891		$	927
Net realized gains (losses)	(5		)	6			(7		)	7
Affordable housing partnerships	(4		)	(8		)	(12		)	(15		)
Other	23			26			56			50
Consolidated investment entities	14			17			75			44
Total net investment income	$	472		$	498		$	1,003		$	1,013

Available-for-Sale securities distributed by type were as follows:

	June 30, 2012
Description of Securities	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Noncredit OTTI (1)
	(in millions)
Corporate debt securities	$	16,551	$	1,915	$	(41	)	$	18,425	$	—
Residential mortgage backed securities	7,210		286		(262		)	7,234		(126		)
Commercial mortgage backed securities	4,146		297		(1		)	4,442		—
Asset backed securities	1,978		72		(35		)	2,015		(14		)
State and municipal obligations	2,009		210		(47		)	2,172		—
U.S. government and agencies obligations	58		10		—			68		—
Foreign government bonds and obligations	190		26		—			216		—
Common stocks	6		4		—			10		—
Other debt obligations	8		—		—			8		—
Total	$	32,156	$	2,820	$	(386	)	$	34,590	$	(140	)

	December 31, 2011
Description of Securities	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Noncredit OTTI (1)
	(in millions)
Corporate debt securities	$	16,380	$	1,741	$	(81	)	$	18,040	$	—
Residential mortgage backed securities	7,440		287		(331		)	7,396		(139		)
Commercial mortgage backed securities	4,430		291		(2		)	4,719		—
Asset backed securities	1,968		61		(44		)	1,985		(15		)
State and municipal obligations	2,026		162		(58		)	2,130		—
U.S. government and agencies obligations	61		10		—			71		—
Foreign government bonds and obligations	126		19		(1		)	144		—
Common stocks	5		4		—			9		—
Other debt obligations	11		—		—			11		—
Total	$	32,447	$	2,575	$	(517	)	$	34,505	$	(154	)

(1)Represents the amount of other-than-temporary impairment (“OTTI”) losses in accumulated other comprehensive income. Amount includes unrealized gains and losses on impaired securities subsequent to the initial impairment measurement date. These amounts are included in gross unrealized gains and losses as of the end of the period.

At both June 30, 2012 and December 31, 2011, fixed maturity securities comprised approximately 89% of Ameriprise Financial investments. Rating agency designations are based on the availability of ratings from Nationally Recognized Statistical Rating Organizations (“NRSROs”), including Moody’s Investors Service (“Moody’s”), Standard & Poor’s Ratings Services (“S&P”) and Fitch Ratings Ltd. (“Fitch”). The Company uses the median of available ratings from Moody’s, S&P and Fitch, or, if fewer than three ratings are available, the lower rating is used. When ratings from Moody’s, S&P and Fitch are unavailable, the Company may utilize ratings from other NRSROs or rate the securities internally. At June 30, 2012 and December 31, 2011, the Company’s internal analysts rated $1.4 billion and $1.2 billion, respectively, of securities, using criteria similar to those used by NRSROs. A summary of fixed maturity securities by rating was as follows:

	June 30, 2012						December 31, 2011
Ratings	Amortized Cost		Fair Value		Percent of Total Fair Value		Amortized Cost		Fair Value		Percent of Total Fair Value
	(in millions, except percentages)
AAA	$	10,958	$	11,564	33	%	$	11,510	$	12,105	35	%
AA	1,774		1,961		6		1,942		2,087		6
A	5,508		6,075		18		5,012		5,442		16
BBB	11,823		13,160		38		11,818		13,050		38
Below investment grade	2,087		1,820		5		2,160		1,812		5
Total fixed maturities	$	32,150	$	34,580	100	%	$	32,442	$	34,496	100	%

At June 30, 2012 and December 31, 2011, approximately 39% and 36%, respectively, of the securities rated AAA were GNMA, FNMA and FHLMC mortgage backed securities. No holdings of any other issuer were greater than 10% of total equity.

The following tables provide information about Available-for-Sale securities with gross unrealized losses and the length of time that individual securities have been in a continuous unrealized loss position:

	June 30, 2012
	Less than 12 months						12 months or more						Total
	Number of	Fair		Unrealized			Number of	Fair		Unrealized			Number of	Fair		Unrealized
Description of Securities	Securities	Value		Losses			Securities	Value		Losses			Securities	Value		Losses
	(in millions, except number of securities)
Corporate debt securities	51	$	528	$	(14	)	15	$	332	$	(27	)	66	$	860	$	(41	)
Residential mortgage backed securities	55	630		(10		)	165	1,010		(252		)	220	1,640		(262		)
Commercial mortgage backed securities	13	104		(1		)	2	39		—			15	143		(1		)
Asset backed securities	21	219		(3		)	38	191		(32		)	59	410		(35		)
State and municipal obligations	9	30		—			20	160		(47		)	29	190		(47		)
Total	149	$	1,511	$	(28	)	240	$	1,732	$	(358	)	389	$	3,243	$	(386	)

	December 31, 2011
	Less than 12 months						12 months or more						Total
	Number of	Fair		Unrealized			Number of	Fair		Unrealized			Number of	Fair		Unrealized
Description of Securities	Securities	Value		Losses			Securities	Value		Losses			Securities	Value		Losses
	(in millions, except number of securities)
Corporate debt securities	124	$	1,647	$	(40	)	10	$	259	$	(41	)	134	$	1,906	$	(81	)
Residential mortgage backed securities	105	1,269		(33		)	141	717		(298		)	246	1,986		(331		)
Commercial mortgage backed securities	14	182		(2		)	5	29		—			19	211		(2		)
Asset backed securities	49	543		(11		)	33	155		(33		)	82	698		(44		)
State and municipal obligations	—	—		—			53	229		(58		)	53	229		(58		)
Foreign government bonds and obligations	6	28		(1		)	—	—		—			6	28		(1		)
Total	298	$	3,669	$	(87	)	242	$	1,389	$	(430	)	540	$	5,058	$	(517	)

As part of Ameriprise Financial’s ongoing monitoring process, management determined that a majority of the gross unrealized losses on its Available-for-Sale securities are attributable to movement in credit spreads.

The following table presents a rollforward of the cumulative amounts recognized in the Consolidated Statements of Operations for other-than-temporary impairments related to credit losses on securities for which a portion of the securities’ total other-than-temporary impairments was recognized in other comprehensive income:

	Three Months Ended June 30,					Six Months Ended June 30,
	2012			2011		2012			2011
	(in millions)
Beginning balance	$	306		$	283	$	303		$	297
Credit losses for which an other-than-temporary impairment was not previously recognized	1			13		1			13
Credit losses for which an other-than-temporary impairment was previously recognized	8			3		13			5
Reductions for securities sold during the period (realized)	(21		)	—		(23		)	(16		)
Ending balance	$	294		$	299	$	294		$	299

The change in net unrealized securities gains (losses) in other comprehensive income includes three components, net of tax: (i) unrealized gains (losses) that arose from changes in the market value of securities that were held during the period; (ii) (gains) losses that were previously unrealized, but have been recognized in current period net income due to sales of Available-for-Sale securities and due to the reclassification of noncredit other-than-temporary impairment losses to credit losses; and (iii) other items primarily consisting of adjustments in asset and liability balances, such as DAC, deferred sales inducement costs (“DSIC”), benefit reserves and reinsurance recoverables, to reflect the expected impact on their carrying values had the unrealized gains (losses) been realized as of the respective balance sheet dates.

The following table presents a rollforward of the net unrealized securities gains (losses) on Available-for-Sale securities included in accumulated other comprehensive income:

	Net						Accumulated Other
	Unrealized						Comprehensive Income
	Securities			Deferred			Related to Net Unrealized
	Gains (Losses)			Income Tax			Securities Gains (Losses)
	(in millions)
Balance at January 1, 2011	$	946		$	(331	)	$	615
Cumulative effect of accounting change	131			(46		)	85		(1)
Net unrealized securities gains arising during the period (2)	190			(65		)	125
Reclassification of net securities gains included in net income	(3		)	1			(2		)
Impact of DAC, DSIC, benefit reserves and reinsurance recoverables	(55		)	19			(36		)
Balance at June 30, 2011	$	1,209		$	(422	)	$	787	(3)
Balance at January 1, 2012	$	1,358		$	(475	)	$	883	(1)
Net unrealized securities gains arising during the period (2)	369			(132		)	237
Reclassification of net securities losses included in net income	7			(2		)	5
Impact of DAC, DSIC, benefit reserves and reinsurance recoverables	(95		)	33			(62		)
Balance at June 30, 2012	$	1,639		$	(576	)	$	1,063	(3)

(1)The Company retrospectively adopted a new accounting standard on January 1, 2012 for DAC. See Note 1 and 2 for additional information on the adoption impact.

(2)Includes other-than-temporary impairment losses on Available-for-Sale securities related to factors other than credit that were recognized in other comprehensive income during the period.

(3)Includes $69 million and $64 million of noncredit related impairments on securities and net unrealized securities losses on previously impaired securities at June 30, 2012 and 2011, respectively.

Net realized gains and losses on Available-for-Sale securities, determined using the specific identification method, recognized in earnings were as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2012			2011			2012			2011
	(in millions)
Gross realized gains	$	3		$	21		$	8		$	39
Gross realized losses	—			(1		)	(1		)	(18		)
Other-than-temporary impairments	(8		)	(16		)	(14		)	(18		)
Total	$	(5	)	$	4		$	(7	)	$	3

Other-than-temporary impairments for the three months and six months ended June 30, 2012 and 2011 primarily related to credit losses on non-agency residential mortgage backed securities.

Available-for-Sale securities by contractual maturity at June 30, 2012 were as follows:

	Amortized Cost		Fair Value
	(in millions)
Due within one year	$	1,406	$	1,432
Due after one year through five years	6,012		6,299
Due after five years through 10 years	6,715		7,567
Due after 10 years	4,683		5,591
	18,816		20,889
Residential mortgage backed securities	7,210		7,234
Commercial mortgage backed securities	4,146		4,442
Asset backed securities	1,978		2,015
Common stocks	6		10
Total	$	32,156	$	34,590

Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations. Residential mortgage backed securities, commercial mortgage backed securities and asset backed securities are not due at a single maturity date. As such, these securities, as well as common stocks, were not included in the maturities distribution.